Democrats representing heavily agricultural districts are urging House leaders to fully exempt family-owned farms from President Joe Biden’s plan to tax appreciated assets at death.
“The repeal of stepped-up basis for capital gains and immediate taxation could especially hurt family farms, some of which have been in families for generations; therefore, we strongly urge you to provide full exemptions for these family farms and small businesses that are critical to our communities,” the 13 lawmakers say in a letter Thursday.
Under current law, appreciated assets such as land, buildings and stock aren’t taxed at death, and because of stepped-up basis, the heirs who later sell the property are only taxed on the appreciation that occurs after they acquired it.
Under Biden’s plan, all assets would be taxable at death with an exclusion for the first $1 million and $250,000 worth of real estate. Farm and small business assets would be exempt from the tax only as long as the business stays in operation. Tax experts say the heirs would be hit with a delayed tax bill when they sold the assets.
Rep. Cindy Axne, D-Iowa, led the letter and is joined on it by nine other members of the House Agriculture Committee.
“The requirement to recognize capital gains at death runs the risk of forcing farms and ranches to sell part, or all, of a farm that may have been passed down for several generations in order to pay the tax burden,” the lawmakers write.
“While the ability to simply sell a small part of an asset may work for those with shares of stocks, it would force farmers to break up land that may have been in their family for decades and seriously impact their ability to remain economically viable.”
Biden’s proposal faces strong GOP opposition, and Democrats have razor-thin margins in both the House and Senate. Democrats control the House by just six votes, 218-212, and the Senate is split 50-50, with Vice President Kamala Harris holding the tiebreaking vote.
A senior member of the Senate Finance Committee, Iowa Republican Chuck Grassley, told reporters Thursday that he doubted Senate Democrats could stay united to pass the plan.
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In addition to Axne, the House Democrats' letter was signed by Jim Costa of California, Josh Harder, Salud Carbajal, John Garamendi and Julia Brownley of California; Cheri Bustos of Illinois; Angie Craig of Minnesota; Antonio Delgado of New York; Kim Schrier of Washington; Tom O'Halleran of Arizona; Abigail Spanberger of Virginia and Kurt Schrader of Oregon.
Some 135 House Republicans have signed a separate letter opposing the Biden tax proposal. "Repealing stepped-up basis and applying capital gains at death, even with an exemption threshold, would create a massive new administrative burden for nearly every American family, farm, and small businesses," those lawmakers say.
Biden argues that allowing wealthy individuals to pass appreciated assets onto heirs without being taxed on the gains contributes to inequality.
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